Mumbai:
India- based company engaged in the exploration and production of oil and
natural gas Essar Oil plans to invest Rs 700-1,000 crore in its Raniganj
project in West Bengal to increase capacity in order to scale up its coal-based
methane (CBM) production to three million standard cubic metres a day (mscmd)
over the next two years.
So
far, the company has invested Rs 3,300 crore in this project, which now
produces one mscmd of CBM. “The investment will be made over 18 months,” said
CEO Manish Maheshwari. The company targets a production capacity of two mscmd
in 2016-17. It also plans to increase its earnings before interest, taxes,
depreciation and amortisation (Ebitda) margin from 48 per cent at present to
65-70 percent.
It
has a revenue-sharing contract with the government for the 260-acre Raniganj
CBM project in West Bengal, where it has been granted mining rights for 500 sq
km. Although it has secured CBM rights in other states, the Raniganj block is
the only operational unit now.
It
has priced its CBM in line with the government’s notification, at $3.4 for each
million of British thermal unit.
The
price, which gets revised every two years, was last revised in 2014. This
means, a price revision is nigh.
“In 2017-18, we might see an improved price regime which will help improve the income further,” Maheshwari added.
“In 2017-18, we might see an improved price regime which will help improve the income further,” Maheshwari added.
Besides
the Raniganj block, the firm owns mining rights in Sohagpur (located in parts
of Madhya Pradesh and Chhattisgarh), Rajmahal in Jharkhand, and Talcher and Ib
Valley mines in Orissa, making the company the largest private CBM producer in
India. It has received petroleum exploration licence (PEL) and forest clearance
for the Sohagpur project with the environmental clearance pending. Operations
in this region are not expected to start before five years. The Raniganj
project will mostly cater to the needs of Matix Fertilisers & Chemicals of the
Datamatics Group. Currently, the fertiliser plant needs 150,000-200,000 scmd,
which is likely to scale up drastically.
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